What is a corporation? The word ‘corporation’ comes from the Latin word ‘corpus’ which means ‘body’. A corporation is thus a group of people working together as if they were in some sense a single entity – a single body.
Corporations are legal entities that are separate from the individual people involved in it. In fact, it may be said that a corporation is an individual in its own right.
Corporations are subject to certain rules. These rules include things such as each member of the corporation being jointly liable for the whole corporation’s finances.
Corporations can also vary in that whilst in some corporations all members have equal standing, in others some members have more power and responsibility than others.
The importance of corporations.
- Getting projects done effectively: Several pairs of hands, and several heads, are better than one and corporations can get projects done more quickly and effectively than a single person could.
- Pooling of resources. Corporations achieve more because they pool the resources. Corporations enable a group of people to put their resources together to achieve more than they could as individuals.
- Creativity: People are more creative and inventive when they work in collaboration.
- Legal importance: Being ‘incorporated’ (or becoming a corporation) creates a new legal entity. Corporations are legal entities that have a different standing to individual people.
- Increased revenue: Larger corporations have increased earning power compared to smaller businesses or private entrepreneurs.
- A recognizable brand image: A corporation can provide businesses with a clear and engaging brand image that is recognized all over the world. Many corporations have become household names throughout the world. They enjoy the fame of international recognition.
Conclusion: A corporation is a legal entity that enables people to work in collaboration to achieve whatever they want to achieve.